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A Promotion Unlike Any Other

4/23/2021

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

Fans of The Office know that whenever Michael Scott attended another person’s party, wedding, or baby’s baptism, he would inevitably steal the spotlight, making the event about him. That kind of social sabotage makes for great TV comedy, but does a recent impromptu endorsement on golf’s greatest green signal that real life self-promotion is off the fairway?

The recent Masters Tournament seemed like a success, including that it crowned its first Asian-born champion, Hideki Matsuyama of Japan. However, “a tradition unlike any other” also showcased some cringe-worthy commercialism that led to the son of an all-time golf great losing permanent access to Augusta.

Perpetuating the Tournament's prestige, Masters’ organizers invited three of golf’s living legends to serve as honorary starters: nine-time major champion Gary Player, 18-time major champion Jack Nicklaus, and Lee Elder, the first African American to play in the Masters. It was at that ceremonial tee shot when the uninvited endorsement occurred:

“While Elder was receiving the accolades of Augusta National and surrounding patrons, Wayne Player, serving as his father's caddie, stood behind Elder clearly holding a sleeve of OnCore golf balls in such a way as to give the logo maximum visibility.”

Wayne Player has a relationship with OnCore Golf that includes serving as Tour Commissioner of the Player Amateur Tour, for which the golf ball brand is the title sponsor.

Social media quickly condemned Wayne Player’s “guerilla marketing,” calling the tactic “an embarrassment” and “undignified,” and suggesting he hijacked a special moment to “sneak in a free ad for golf balls.” Masters organizers apparently didn’t like the ambush advertising either: They’ve reportedly banned Wayne Player from the Tournament for life.

Those are harsh criticisms and consequences, especially given that considerable commercialism already surrounds the Professional Golfers’ Association of America (PGA) and the Masters.

The PGA’s Partners’ webpage reads like a Who’s Who List of corporate sponsors. “Official Partners” include the likes of AIG, Charles Schwab, Cadillac, John Deere, KitchenAid, KPMG, and Rolex. Then, there’s a whole other list of “Golf Retirement Plus Partners.” In total, 54 companies can claim they support the PGA.

For its part, the Masters Tournament’s website contains logos and links for its three marquee sponsors, AT&T, IBM, and Mercedes, who reportedly treat invited guests to an incredibly indulgent tournament experience, all charged to their corporate accounts.

What may be even more noteworthy is that the golf balls Wayne Player held were far from the only promotion present at the ceremonial tee shot. Gary Player wore a PXG hat, whose golf clubs he endorses, and a Black Knight shirt—his own signature brand. Similarly, Nicklaus came outfitted in a bright yellow sweater and matching hat, both bearing his Golden Bear brand. Elder also wore branded apparel: a PNG hat and a TravisMathew shirt—the latter is part of a formal partnership with Elder that the company announced just days before the Masters.

Given all of the corporate/self-promotion already present at the starting tee, what was wrong with Player strategically displaying one small sleeve of golf balls?

There are two main reasons Player’s product placement was ill-advised:

It was unnatural: It’s typical for golfers and others to will wear branded apparel on golf courses and elsewhere. It’s strange, however, to see someone hold steadily a sleeve of golf balls precisely so its logo appears prominently in camera shots. That’s why when product placement is done well in movies and TV shows, the products don’t draw attention to themselves; rather, viewers simply see them as part of the scene, if they notice them at all.
It was uninvited: The very unique Masters moment belonged to Gary Player, to Nicklaus, and especially to Elder. No person or thing should have stolen the spotlight from them, at least not without the Masters’ express permission. Ultimately, Wayne Player pulled a Michael Scott, showing little social awareness and, instead, surmising that the situation should be about him, not just the others.

So, the next time you’re a caddie at the Masters . . . of course, that’s a situation most of us will never experience, which makes it even more tempting to point a finger at Wayne Player, shake our heads, and wonder how he could act so insensitively. The problem, though, is that the proliferation of social media has made it exceedingly easy for any individual or organization to do the same sort of thing and steal others’ spotlights.

On a corporate level, such commandeering might take the form of a company donating $10,000 to a worthy social cause, then spending $100K to brag about its kind-hearted contribution in TV commercials, print ads, and other media.

Individuals also are not immune. We should be especially careful not to steal the spotlight with one upmanship. For instance, when a friend or colleague shares a special accomplishment on social media, we shouldn’t ‘congratulate’ them with a reply like, “I’m so happy for you. I remember when I completed my first 5K three years ago. Now I’m getting ready to run my fourth marathon.”

A few years ago, the American Marketing Association published a piece I wrote about the “Three C’s of personal branding.” In the article I argued that communication, which is what many people solely associate with branding, should only be the “icing on the cake.” A strong personal brand, or corporate brand, must first include a foundation of “cake”: character and competencies.

When we steal another’s spotlight and try to make their moment ours, we not only misplace our personal marketing communication, we reveal the serious character flaw of callous self-absorption, which is very destructive to any brand.

No self-promotion should come at others’ expense. In fact, the best self-promotion actually benefits others.

It’s easy to argue that Wayne Player’s golf ball product placement at the Masters was a bad idea. It’s also easy for any of us to succumb to similar temptations in everyday situations and make another’s moment our own. Pulling a Wayne Player, or a Michael Scott, makes any of us guilty of “Mindless Marketing.”

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Is It Right to Sell Others Short?

4/10/2021

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by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

You’re a basketball player whose team just won the NCAA Division I national championship! You run courtside to celebrate with family but your mother is visibly upset. “Mom, what’s the matter? “I’m sorry,” she stammers. “It’s just that . . . I bet against you.”

No athlete, or anyone, likes to be picked to lose. However, life is full of potential successes and failures that people need to predict. For some, those predictions offer significant money-making opportunities. But, is it right to earn a living betting against others?

As for many, the practice of short selling stocks burst onto my radar screen when GameStop’s shares took their rollercoaster ride several weeks ago. With more than a casual interest, I followed the ensuing events, including Robinhood CEO Vlad Tenev’s testimony before Congress. Along the way, I gained a better grasp of what short selling is, but ever since, I’ve been wondering whether anyone should be doing it.

In case you’ve forgotten how short selling works: Investor A borrows from a broker 100 shares of XYZ at $100 per share and sells the stock to Investor B at the same prevailing market price, or $10,000 total. Over the next week, XYZ’s stock price drops to $75. Investor A then buys 100 shares of XYZ for $7,500 and returns them to the broker, pocketing $2,500 in the process, less any interest and commissions the broker has charged.

The Securities and Exchange Commission (SEC) has made short selling legal. However, even with this regulatory approval, the practice should raise at least two red flags, or moral concerns, that lead one to ask: Is short selling ethical?

Before addressing the two concerns, I imagine some may be wondering what short selling has to do with marketing—the other half of this blog’s two-pronged focus. Short selling is marketing in that many stockbrokers, including very well-known ones like Interactive Brokers, TD Ameritrade, and Charles Schwab, market short selling among their investment services, or ‘products.’

For instance, Interactive Brokers’ website contains a Shortable Instruments (SLB) Search tool: “a fully electronic, self-service utility that lets clients search for availability of shortable securities from within [the firm’s] Client Portal account management platform.” The relative ease with which an investor can sell short makes its moral implications all-the-more important.

First Red Flag

‘Selling something that one doesn’t own’ was the short selling issue that initially gave me pause. Peddling another’s property certainly appears problematic, until one begins to consider the many ways in which such leveraged transactions regularly occur: from apartment subleases, to bank loans, to consignment clothing. Individuals and organizations often sell others’ property on consignment.

Of course, just because consignment occurs doesn’t mean it should. Still, the fact that all parties involved 1) willingly participate and 2) typically benefit are good signs that most of these activities are above-board.

Second Red Flag

The prior examples differ from short selling, however, in the second of the two ways: While the participants in apartment subleasing, etc., generally rise and fall together financially, a short seller’s success comes courtesy of two others’ failures, namely 1) those of the company whose stock the short seller has borrowed and 2) the person who buys the stock from the short seller. The short seller makes money when the other two parties lose theirs.

In contrast, consider again the clothing consignment example: If I take an unwanted suit to a consignment shop, both the consignor and I will want a high price when the suit is sold. Conceivably, the suit’s maker also would like its aftermarket products purchased for higher prices because such resale value reflects favorably on the brand, not unlike the way higher vehicle resale prices benefit automobile manufacturers’ brands.

On the other hand, the suit’s buyer would like to pay a lower price, but even he really doesn’t want the price to be too low, since perceptions of the brand are tied, at least in part, to the price that he and others are willing to pay for the suit. Most importantly, each time he wears the suit, he extracts value from it.

The suit is this example is analogous to the stock. Whereas everyone ‘invested’ in the suit seems to want it to retain its value, investors who short stocks clearly want the value of those securities to decline. Short sellers are betting against the very companies whose financial instruments they have borrowed and sold, as well as the individuals on the receiving end of those stocks.

The zero-sum game, or winner-loser outcome, that underlies short selling is certainly atypical of most economic exchanges, but it’s not without precedent. Casinos win when their customers lose, as do many “rent-to-owe” retailers like Rent-A-Center and Aaron's. Any kind of predatory lender falls under the same unseemly umbrella, including certain credit card companies that don’t make money unless people fail to pay off their account balances and become locked into an endless cycle of exorbitant monthly interest payments.

However, many argue that short selling does not do anything nearly so destructive. In fact, some contend that the practice produces several important economic benefits, the primary one being liquidity, “the efficiency or ease with which an asset or security can be converted into ready cash . . . . ”

In my research, I found market liquidity to be the factor cited first and most often in the defense of short selling. However, at least one financial markets expert suggests that advantage is exaggerated.

Dwayne Safer is a chartered financial analyst (CFA) whose career has included significant roles in investment banking, corporate finance, and strategy. For the last five years, he’s been a professor of finance and my colleague at Messiah University. When asked about short selling and market liquidity, he offers a contrarian analysis: “the liquidity offered by short selling for most stocks is negligible.”

Safer supports his suggestion by sharing a Bloomberg Terminal screenshot (below) that shows that shares sold short represent only about 3.5% of trading volume on the New York Stock Exchange (NYSE). He also cites an example from the financial crisis in late 2008, when the SEC temporarily banned the short selling of financial stocks “without any noticeable degradation of liquidity in those stocks.”

Safer recognizes that there may be some “modest liquidity benefit” for certain heavily shorted stocks; for instance, at the time we spoke, 21% of Dick’s Sporting Goods’ shares available for trading were short. Still, he affirms: “If shorting wasn’t permissible, liquidity would be brought into the market by the broker-dealers and market makers who would stand ready to buy and sell shares of a given company to generate trading revenue.”

So, does the elimination of liquidity as a main benefit of short selling leave no morally tenable ground on which short sellers can stand? Not necessarily.

Safer continues by saying that although he doesn’t agree with conventional wisdom that short selling adds significant market liquidity, he does believe short selling offers other meaningful market benefits:

It provides the ability to hedge/protect a portfolio from downward movement in stock prices, mitigating portfolio volatility.
The in-depth research short sellers often conduct can expose fraudulent companies. For example, short selling hedge funds warned about the frauds at Enron, Tyco, Fannie Mae and more recently Luckin Coffee and Nikola.
Shorting helps prevent overinflated securities prices that waste valuable capital and harm investors, as occurred in the dot-com bust in 2001. Former SEC chairman Christopher Cox once stated, "We need the shorts in the market for balance so we don't have bubbles.”

Before beginning to write this piece, I was unaware of these important benefits of short selling. Still, how do we reconcile such consequences with the moral principle of respect, or as my second red flag/concern described: not betting against another person.

That moral principle certainly has merit, but my earlier discussion probably represented too narrow a view of short selling. Safer’s observations have helped me see that there are other factors to consider and parties to take into account, e.g., other investors, firms’ customers and employees, and the economy as a whole.

I’m also helped by remembering a story I heard just a few days ago: A guest speaker in our capstone marketing course mentioned that a former client of his used to tell him, “I pray for my competitors.” This very successful business owner was not being sarcastic—he truly wanted his competitors to succeed both because he genuinely cared about them and because he understood that “a rising tide lifts all boats.”

Returning to the basketball metaphor that began this piece, no serious athlete wants to be on the winning side of a forfeit. Basketball players need competitors, who also happen to have fans rooting for them.

However, choosing loyalties isn’t unique to picking stocks or selecting sports teams. Each day we make dozens of similar decisions when choosing what clothes to buy and where to order takeout. Each selection of a company is essentially a vote against another; however, other people are voting for the competitors. In fact, the next time one of those ‘other’ votes may be ours.

Meanwhile, a ‘no vote’ conveys valuable information to all who are willing to listen and learn from it. When companies assimilate such negative feedback, they make themselves better, their industries stronger, and stock markets more stable.

It’s very unlikely that a mother bets against her own daughter or son for anything, but other ‘no votes’ are not necessarily bad. Short selling a company’s stock can be a good or bad bet for the investor. It also can be “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

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A Promotion Unlike Any Other

Is It Right to Sell Others Short?

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